EC Brass to Skip Microsoft’s Antitrust Hearing

With billions of dollars at stake, Microsoft announced late Thursday that it is canceling the oral hearing that the European Commission (EC) had scheduled June 3 to 5 for the company to present its response to antitrust charges.

The outcome of the case could cost Microsoft more than a billion dollars in fines and penalties and, should Microsoft lose, is likely to force Microsoft to bundle other browsers with copies of Windows sold in the European Union (EU).

A senior Microsoft (NASDAQ: MSFT) lawyer said the reason for canceling the hearing was that, instead of attending the hearing in Brussels, senior EC competition officials will be in Zurich, perhaps ironically, for a meeting of the International Competition Network (ICN).

“As a result, it appears that many of the most influential Commission and national competition officials with the greatest interest in our case will be in Zurich and so unable to attend our hearing in Brussels,” said a blog post by Dave Heiner, Microsoft deputy general counsel.

So why not reschedule?

“Unfortunately, the Commission has informed us that June 3-5 are the only dates that a suitable room is available in Brussels for a hearing,” Heiner’s post continued.

Microsoft already submitted its formal written response to the EC competition directorate back in April. The hearing was optional for Microsoft, and the company had requested it as an option.

Playing games?

Still, at least one analyst thinks enough is too much.

“They’re [the EC] playing games [because] there’s no question that, if they really wanted to provide the venue, they would do it,” Tim Bajarin, president of Creative Strategies, told InternetNews.com.

“The whole way the EC is handling this is ridiculous,” Bajarin said.

That may be, but it’s serious business nonetheless.

The case began in late 2007, when Norwegian browser maker Opera complained that Microsoft’s default bundling of IE with Windows unfairly damaged its efforts to build a substantial user base in the EU countries.

Next page: Internet Explorer case dates back to 1996

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In mid-January, 2009, the EC sent Microsoft a “statement of objections” – a sort of preliminary indictment – saying that the EC’s investigation found that Microsoft had illegally tied IE to Windows going back to 1996.

The EC gave Microsoft 90 days to file its written response — 30 days longer than the normal response period. It also had the option of requesting a hearing following the filing, which Microsoft did, although the company’s lawyers said at the time that they might not require it.

Now, the shoe is on the other foot.

“We believe that holding the hearing at a time when key officials are out of the country would deny Microsoft our effective right to be heard and hence deny our ‘rights of defense’ under European law,” Heiner’s post said.

The EC has not said when it might decide the case now that the hearing is off, and Microsoft’s filing is in. A call to the EC’s offices in Washington for comment was not returned immediately, due to the beginning of the holiday weekend.

Microsoft has had other rubs with the EC over its market dominance. The company was fined roughly $970 million after a European court in September 2007 upheld an earlier antitrust ruling against Microsoft regarding bundling of Windows Media Player with Windows and was also found to have withheld technical data from competitors needed to interoperate with the company’s workgroup servers.

However, Microsoft is contesting a second fine for $1.35 billion that it incurred for dragging its heels in providing information to competitors, after it had been ordered to provide that documentation. In recent SEC filings, Microsoft has warned shareholders that if it loses the Internet Explorer bundling case it will likely have to, not only include competitors’ browsers with Windows, but also to pay yet another hefty fine — perhaps the largest one yet.

Meanwhile, Creative Strategies’ Bajarin sees a larger trend with the EC’s recent antitrust actions, including a recent ruling and fine against U.S. chip giant Intel.

“It continues to underscore the fact that they [the EC] seem to be only going after American companies, and that is getting serious notice in Washington, these days,” Bajarin added.

Indeed, Intel (NASDAQ: INTC) felt the wrath of the EC when it ruled against the chipmaker earlier this month for using its own market dominance to push out chip competitors in EU markets. The bill for that (which Intel is appealing): $1.45 billion.

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